Crystal Run to pull plug on its health plans

March 30-- Mar. 30--TOWN OF WALLKILL -- Crystal Run Healthcare will seek state approval to eliminate its health plans, the company announced Friday, while faulting a key Affordable Care Act provision for the decision.

Company leaders said they will ask the state to allow Crystal Run to wind down the doctor group's 4-year-old health insurance lines due to what it calls the ACA's faulty risk adjustment methodology.

Crystal Run, a giant mid-Hudson doctor group based in the Town of Wallkill, has insurance products serving 6,401 members, including 3,723 in health maintenance organization plans and 2,678 in exclusive and preferred provider organization plans. Nearly all the members are in Orange and Sullivan counties.

Pending approval from state regulators, Crystal Run hopes to wind down its health plans in six to nine months.

Company leaders added that the practice is otherwise healthy, with a projected 300,000-plus patients in 2019; 2,700 employees, including more than 400 providers in over 50 specialties; and 22 locations in Orange, Sullivan and Rockland counties.

Crystal Run executives blamed the ACA's risk adjustment methodology. Created to keep small, newer insurers from cherry-picking healthy members, the formula essentially makes health plans with lower-risk or healthier enrollees transfer funds to plans with higher-risk or sicker members.

The trouble, company leaders said, is that the law doesn't give new health insurance plans enough time, flexibility and options to properly estimate a health score for the wellness of its members.

Since offering health insurance in 2015, Crystal Run collected nearly $70 million in premiums, covered $46 million in medical costs, and contributed almost $18 million to other insurers via risk pool payments.

That left little money for the firm to expand its plans to new members throughout the mid-Hudson, company leaders said.

"Unfortunately, like many new plans, the risk adjustment methodology in the Affordable Care Act created an impractical and unsustainable financial obligation for insurers," said Hal Teitelbaum, Crystal Run's CEO and managing partner, in a statement. "We will continue to honor our commitments to the members and providers of Crystal Run Health Plans as we work with the regulators on a plan of closure."

Crystal Run's risk adjustment-related rationale for closing its plans was one of the major reasons offered by Northwell Health, the state's biggest hospital system, for its August 2017 decision to close its CareConnect Insurance Co. division.

Similarly, the Health Republic Insurance co-op cited the same risk adjustment formula for its late 2015 failure. A Crystal Run insurance unit closure would notably leave Oscar health insurance as one of the few post-ACA health plan start-up offerings still surviving in New York.

Absent payments into the risk pool, Crystal Run leaders said they would have had the capital to grow membership to more than 15,000, allowing 16 percent to 18 percent overhead, the minimum level for profitability.

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